Banks, AstraZeneca lift London’s FTSE

Capita, Mitchells & Butlers drop after trading updates

By

SimonKennedy

LONDON (MarketWatch) — Sharp gains for banks pulled the main British equities index higher Thursday as details emerged regarding a European plan to combat the sovereign-debt crisis, while AstraZeneca PLC also rallied after a much-needed drug approval from U.S. regulators.

The gains followed reports that euro-zone leaders will sign off on a new aid deal for Greece, which would include longer maturities on loans from the European Financial Stability Facility as well as lower interest rates.Read more on the new aid plan for Greece.

AstraZeneca (AZN) ranked as another top performer, rising 2% after the Food and Drug Administration late Wednesday approved Brilinta, its blood-thinning drug.

The decision delivered a welcome boost for the stock, on the heels of a U.S. regulatory setback Tuesday: An FDA advisory committee voted not to back a new diabetes drug developed by AstraZeneca in partnership with Bristol-Myers Squibb Co.
BMY, +1.26%

Deutsche Bank analyst Mark Clark said in a note to clients that the Brilinta decision will come as a “huge relief” to investors, who had been worrying about conflicting trial results for the drug between U.S. and non-U.S. patients.

The FDA accepted a hypothesis that the difference was due to high aspirin doses given to U.S. patients. However analysts also pointed out that high-visibility warnings required by the FDA could undermine sales in the U.S.

Societe Generale analyst Marietta Miemietz said that SocGen is forecasting peak U.S. Brilinta sales of just $300 million and that the consensus $1.07 billion forecast is likely to fall.

Mining stocks traded mostly lower in London, after a preliminary reading of China’s manufacturing purchasing managers index indicated production activity is beginning to contract. Read more on the Chinese data.

Among Thursday’s decliners, Capita Group PLC (CPI) stood out, dropping 1.6%. The outsourcing company reported a 7% increase in underlying pretax profit for the first half as well as a rebound in orders, but management also cautioned that trading conditions remain challenging.

Other movers in London included home-improvement retailer Kingfisher PLC (KGF), shares of which climbed 5.6%. The group said sales growth in its French business offset trading conditions that had been expected to be tougher in the second quarter.

And among mid-cap stocks, Mitchells & Butlers PLC (MAB) fell 2.9%. The pub operator said the underlying like-for-like growth trend has softened to around 1% as the short-term outlook for trading remains uncertain.

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